If your residential property was vacant for more than 6 months in the preceding calendar year, you may be subject to vacant residential land tax.
Vacant residential land tax (VRLT) may apply to residential land that is vacant for more than 6 months in the preceding calendar year. Residential land includes:
- land with a home on it
- land with a home which is being renovated or where a former home has been demolished and a new home is being constructed
- land with a home on it that has been uninhabitable for 2 years or more.
The Victorian Government introduced VRLT from 1 January 2018 to help address the lack of housing supply in Victoria. VRLT is assessed by calendar year (1 January to 31 December) and the owner of the property is liable for it. VRLT is different to land tax, the absentee owner surcharge and the federal annual vacancy fee.
From 1 January 2025
Where does VRLT apply?
From 1 January 2025, VRLT will apply to residential land across all of Victoria if the land is vacant for more than 6 months in the preceding calendar year. Prior to 1 January 2025, it applied only to vacant residential land in inner and middle Melbourne.
This means that if you own residential land in Victoria that is vacant for more than 6 months in 2024, you may be liable for VRLT in 2025.
How much is VRLT?
From 1 January 2025, a progressive rate of VRLT will apply to non-exempt vacant residential land across all of Victoria. VRLT is calculated on the capital improved value (CIV) of taxable land. The CIV of a property is the value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process. It is displayed on the council rates notice for the property.
The rate of VRLT is based on the number of consecutive tax years the land has been liable for VRLT and is:
- 1% of the CIV of the land for the first year the land is liable for VRLT where the land was not liable for VRLT in the preceding tax year
- 2% of the CIV of the land where the land is liable for VRLT for a second consecutive year
- 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year.
From 1 January 2026
How much is VRLT?
Unimproved residential land in metropolitan Melbourne that has remained undeveloped for at least 5 years and is capable of residential development may attract VRLT from 1 January 2026 onwards.
Non-exempt vacant residential land across all of Victoria remains subject to the progressive rates explained above.
This annual tax is set at 1% of the CIV of taxable land. For example, if a vacant home has a CIV of $500,000, VRLT will be $5,000.
Notification requirements
If you own a property that was vacant for more than 6 months in the preceding calender year, you must notify the State Revenue Office (SRO) by 15 January of the following year via their online portal. If you miss the deadline, notify the ATO as soon as possible to avoid penalties.
Failure to report vacant properties can result in penalty tax under the Taxation Administration Act 1997, with penalties ranging from 5% to 90%, depending on the timing and circumstances of your disclosure:
- 5% if you notify the ATO before an investigation begins.
- 20% if you notify the ATO after an investigation has started.
- Up to 90% for intentional non-disclosure or obstruction.
Late disclosures are generally treated more favorably than properties identified through an investigation. The ATO’s portal also allows you to claim exemptions, update contact details, or nominate a representative for future correspondence.
